The Fall of the House of Zeus

by Curtis Wilkie

  Indignant over being excluded by the U.S. Attorney’s Office, the Oxford agents questioned the wisdom of a daylight raid that would be highly publicized. They, too, had little doubt of Scruggs’s guilt, based on the intercepted telephone calls, but they advocated a different approach. Knowing of a loose network of public officials and private fixers who had been swaying the outcome of court cases in North Mississippi for years, the Oxford FBI agents felt that Scruggs should be privately confronted with the incriminating information and squeezed into testifying against these powerful political figures. Even if the trail led to his brother-in-law.

  And after hearing of Lott’s announcement, several of the agents were convinced that someone in the U.S. Attorney’s Office, while retaining deniability of doing it directly, had managed to get word of the investigation to the senator.

  The prosecutors dismissed these contentions as petty carping by disgruntled agents who had no role in the investigation. For the U.S. attorneys, Scruggs served as the ultimate Big Fish.

  Early on the morning of November 27, Scruggs’s junior partner Sid Backstrom was dressing for work when his three-year-old son informed him that someone was knocking loudly on their front door. Backstrom found that the noise came from two FBI agents, who displayed their badges and said they wanted to talk with him. He invited them inside his home. They said they preferred to talk outside or in their car.

  “Can you tell me what this is about?” he asked.

  “The bribery of a judge,” one of them answered.

  At their car, a laptop was produced and a recording of one of Balducci’s conversations with Backstrom began. The audio lasted two minutes. In it, Backstrom heard a replay of a call he had received while working on the Gulf Coast five weeks earlier.

  Balducci: “I swung by your office a little while ago and saw Zach and dropped off a copy of those papers that we’ve been waiting on.”

  Backstrom: “Oh, great!”

  Balducci: “Everything looked just right. Just like we wanted …

  That’ll probably get distributed in the mail here in the next few days so you’ll probably get an official call with the good news directly.”

  Backstrom: “Good.”

  Balducci: “But we got us a little advance copy this afternoon.”

  Backstrom: “Good deal, good deal.”

  Balducci: “Just so you’ll know, Dick hired me to prepare the voir dire for the upcoming Katrina trial y’all got in Jackson County, and to review the other voir dire, et cetera, from some of those other trials, and do a little analysis and summary of that. And he gave me a retainer check today for forty grand for that.”

  Backstrom: “Oh, great! Well, that’s a good deal for everyone.”

  To the FBI, the call illustrated a cover story Scruggs conceived to justify the $40,000 payment: that the money had gone to Balducci for his work on jury consultation for the Scruggs Katrina Group.

  The agents asked Backstrom if he recognized the voice other than his own.

  “Sounds like Tim Balducci,” Backstrom said. He struggled to think clearly. He was not sure what the FBI visit meant, but he knew it could not be good.

  The agents—one of them was Bill Delaney—asked Backstrom to come with them to the U.S. Attorney’s Office. Backstrom said he preferred to drive himself, explaining that he had a flight to catch later that day to go to the Gulf Coast for a Katrina settlement hearing. The agents insisted that he come with them. Backstrom, just as adamantly, refused.

  In his own car, he followed the pair to the back entrance of the downtown building, where several men were waiting sternly at the gate. In their dark suits they looked ready for a funeral. Among them, Backstrom recognized only Tom Dawson, the chief prosecutor, who worked out regularly at the same health club where Backstrom was a member.

  “You’re dressed differently,” Backstrom quipped. Dawson neither answered nor smiled.

  Upstairs, Backstrom was led to a windowless room where he was given a chair across the table from six glowering men. Thinking about the encounter later, Backstrom was certain the authorities failed to give him the standard Miranda warning: that he had the right to remain silent and to seek legal counsel.

  Instead, Dawson opened the interrogation on a chilling note. “There’s only one question you need to answer this morning,” he said. “Do you want to be able to see your children graduate?”

  Backstrom asked for an explanation.

  Another of the prosecutors, Bob Norman, said they would “show a little leg,” and began to recite some of the recent dates and conversations that Backstrom had had with Balducci.

  The prosecutors said he could cooperate with them and probably escape with a five-year prison sentence. Backstrom was stunned. To him, this constituted a threat, not an offer. He fumbled for a response and said he could not give an answer right away. He reminded the group he had a flight to catch and a court appointment.

  Backstrom asked if he was under arrest. No, but he was urged not to leave Oxford. The prosecutors warned him not to reveal a word of their meeting to anyone.

  He reiterated that he had to fly to the coast.

  They suggested that he call in sick. “I can’t do that,” Backstrom said. “I haven’t missed a day of work in years. They’d know something was wrong.”

  His interrogators suggested that he call the judge hearing his case and ask for a postponement. Backstrom said he was unwilling to give a bogus reason. He was struck by the fact that after their initial questions, the first request the federal authorities made of him was to ask him to lie to a judge.

  Backstrom was free to go, but before he left, he wanted to ensure that he was not wiping out a window of opportunity for further talks. He said he wanted to consult with a lawyer. If he chose to talk later, he asked, “will I still be in the realm of cooperation?”

  Only if he acted quickly.

  Norman warned Backstrom, “There may be contact with your office today.” If he revealed anything about their meeting to his associates at the law firm, he would jeopardize any possible agreement with the prosecutors.

  As soon as he left the building, Backstrom called Rhea Tannehill, a good friend whom he had planned to meet at a Bible study group at eight o’clock. Tannehill was a lawyer with experience in criminal defense.

  “Rhea,” he said, “I need your help.”

  Across town, an unsuspecting Dick Scruggs prepared to leave his own home, an architectural masterpiece built in the style of a Louisiana plantation house, with twelve white Ionic columns accentuating a front gallery with a view of the long landscaped lawn sloping toward Old Taylor Road. Complete with a pool, a guesthouse, and another building housing elaborate exercise equipment in the back, the complex had cost more than $6 million. It had taken nearly two years to complete, and even after Dick and Diane moved in during the summer, workers had continued to troop through the house like so many nettlesome insects at a picnic. “I think they are living in our attic,” Diane complained.

  Diane was not well. She still suffered from Crohn’s disease, a persistent illness that frequently left her debilitated. On one occasion, her weight had fallen to a mere eighty-four pounds, and she sometimes required hospitalization. She had undergone surgery earlier in the year and was weak. But she and Dick were getting ready for a large party on Saturday that would christen their home and further establish them as permanent members of the Oxford community. On top of that, in two weeks they would be hosting former president Bill Clinton at a fund-raising reception for his wife, Hillary, a candidate for the Democratic presidential nomination.

  Scruggs was proud of his place in American politics. For years a dominant player in his home state, he had begun to reward his allies on the national scene after the tobacco settlement made him wealthy. Though Trent Lott had warned him not to squander his money on the woebegone presidential campaign of Senator Joe Biden, Scruggs made a significant contribution. He also funneled thousands of dollars to Republican senator John McCain, his compatriot in the to
bacco wars. But these contributions were merely gestures to old friends. Scruggs was really counting on Hillary Clinton to win back the White House for the Democrats.

  At the Ole Miss–LSU football game earlier in the month, Scruggs had clambered over a low railing separating Chancellor Robert Khayat’s suite from Joey Langston’s box, which Scruggs had been visiting. He wanted to greet Tom Brokaw, whom he had met on the NBC anchorman’s previous visit to Oxford, and to invite Brokaw’s local hosts to the Clinton reception. Scruggs seemed almost childlike in his enthusiasm. His pride in the event had been boosted by Steve Patterson, who praised him for attracting “the most popular man in the world” to Oxford.

  As he left for work that Tuesday, Scruggs had less happy concerns—restoring his wife’s health, fighting Judge Acker’s contempt citation in Alabama, getting ready for approaching trial dates in Katrina litigation, remembering to fine-tune his home before the upcoming parties—but no overwhelming worries.

  Driving his black Porsche SUV out of his winding driveway, he passed William Faulkner’s home, Rowan Oak, around a bend in Old Taylor Road, and turned onto South Lamar Boulevard, flanked by stately old mansions, on the way to the square. It was a brisk, invigorating autumn morning.

  Zach Scruggs had just dropped off his two children at a Montesorri school en route to the office when his cell phone rang. Don Barrett was calling from his home in Lexington. “Have you heard anything about that damned Jones case?” he asked. Zach said he thought it was going to arbitration; he was more concerned with a pending Katrina case he had argued in Jackson the day before, a case that the judge had continued, to Zach’s chagrin, until January.

  Arriving at the office, he encountered Backstrom, who was about to fly to the coast to deal with another of the Katrina cases. Backstrom looked a bit wan. Zach said he was sorry he could not accompany him, then thought to mention: “Don just called and asked about the Jones case. Have you heard anything?”

  Backstrom’s expression changed to one of surprise. He had spent much of the early morning fending off FBI questions on the case and was laboring under his promise of silence.

  “Uh-uh,” Backstrom said. “I’m just tired of dealing with those guys.” The “guys” were Balducci and Patterson.

  Outside the Scruggs Law Firm, a team of FBI agents waited in their cars, frustrated by yet another hitch in their plans. Two members of the U.S. Attorney’s Office in Memphis, assigned to serve as a “taint team” for the raid on Scruggs’s office, had not arrived in Oxford on time. The government attorneys were needed to ensure that documents irrelevant to their search were separated from pertinent papers. Otherwise their collection of evidence might be legally compromised.

  It was not the first delay. A search warrant issued earlier in the month by Judge Biggers had expired before it could be used. Plans for a coordinated move against members of the Scruggs firm and Steve Patterson had been thwarted when Patterson left the country. A second search warrant had been signed the day before by Biggers. An eleven-page affidavit accompanying the request for the authorization had been prepared by Delaney. In it, the FBI agent spelled out the government’s pursuit of evidence in the bribery case over the months and asked for permission to seize computer hardware and software and digital storage devices at the law firm.

  Delaney was accompanied by agents who specialized in high technology. The FBI had also moved a van bearing heavy-duty equipment into a parking place on the square near Scruggs’s office.

  Finally, at mid-morning, the taint team arrived, and the federal authorities went bounding up the twenty-four steps leading from the sidewalk to the lobby of the law firm.

  Scruggs was standing at the threshold of his son’s office, discussing the stalled case in Jackson, when receptionist Vicki Evans came running down the hall. “The FBI is here,” she announced, “and they want everybody out front.”

  There was a confused scene in the lobby. A son-in-law of Trent Lott’s, stopping in for a casual visit, found himself herded with a small group of office workers. One of the agents informed Scruggs, “We’re here to execute a search warrant.”

  Scruggs thought at first that the raid had been triggered by Judge Acker’s contempt citiation. But inspecting the warrant—attached to a streamlined version of the FBI affidavit (with some of the names redacted)—Scruggs saw that it apparently involved the Jones case. The warrant indicated that the FBI was looking for at least one document, a September order signed by Judge Lackey.

  Zach’s first impression: This is some more of Grady Tollison’s bullshit.

  But it was obviously serious stuff. The Scruggses needed someone with experience in criminal defense. So they called Joey Langston in Booneville, and he literally flew, eight minutes in his jet, to Oxford.

  · · ·

  Around the corner from the square, inside a cloistered room in the red brick federal courthouse, Tim Balducci had begun testifying before a grand jury. Under rules governing grand juries, there is no defense. Potential defendants—targets of investigations—have no representation, and prosecutors lead the examination of witnesses. Grand jurors are offered the opportunity to ask questions, but the process is a distinctly one-sided affair.

  Under the direction of assistant U.S. attorney Bob Norman, Balducci spilled out his story. He said that members of the Scruggs Law Firm had come up with the scheme for Balducci to approach Judge Lackey. “The issue of the litigation that had been filed against them by the Jones law firm came up” in a discussion, Balducci testified. “Zach Scruggs or Sid Backstrom—I’m not sure which one—initially brought up the fact that the case had been assigned to Judge Henry Lackey.”

  Balducci continued: “Both Zach Scruggs and Sid Backstrom knew that I had a long history of a close professional and personal relationship with Judge Lackey … He and I have been friends for going on the better part of fifteen to twenty years. We were very close. And during the course of that meeting, members of the Scruggs firm approached me and asked me if I thought it would be possible for me to use my personal relationship with Judge Lackey to influence him to assist them in something that they wanted done in the case.”

  Asked which member of the Scruggs firm had made the overture, Balducci answered, “It was a group discussion from them. It was presented to me in sort of a free-form discussion during the meeting, with all three of them interacting with me on that issue.”

  Balducci added: “What they were asking me to do was to influence Judge Lackey and get him to send that case to arbitration and take it out of his court. So when they asked me if I thought, based on my relationship with him, if I could do that, I told them that I was willing to try.”

  Balducci said he was motivated by the belief that he would be invited into the Scruggs Katrina Group to replace Johnny Jones. “I had just left the Langston firm and got out on my own in New Albany. And I did not have any resources. I was trying to start this business and, you, know, I needed the money, and I didn’t have it. And it was the lure of that, in large part, that convinced me to do it.”

  He said he had been willing to approach Judge Lackey in order to stay in the good graces of Dick Scruggs. He claimed that Backstrom had held out the possibility that Balducci’s firm could be given a seat in the Scruggs Katrina Group, a move that could lead to “potentially millions of dollars in fees.” Balducci added that he had wanted to ensure that Scruggs would pay the full $500,000 promised to Balducci and Patterson to convince Attorney General Jim Hood to drop his criminal case against State Farm.

  Of P. L. Blake’s role in the payment to Lackey, Balducci said, “It’s hard to explain and it’s hard to understand.” Yet he tried. “Mr. Blake has served for many years as a conduit and a layer of separation, if you will, between Mr. Scruggs and other people on sensitive issues.”

  Balducci said that he and Patterson “sort of play by the rules that we knew Mr. Scruggs normally played by.” As a result, he said, Patterson talked with Blake about a $40,000 “problem.”

  A subsequent conv
ersation took place between the two men, he said, “where P.L. told Steve that P.L. had relayed that information to Dick Scruggs and that Dick Scruggs had said for us to go ahead. Finish the job and that he would cover the $40,000.”

  Though the grand jurors who would soon vote indictments had no way of knowing it, there were discrepancies between Balducci’s presentation and the recollections of others.

  Those who were involved in the meeting when Balducci volunteered to meet with Judge Lackey recalled that it was Patterson, not members of Scruggs’s firm, who had first suggested the approach.

  Speaking of Balducci’s initial encounter with Judge Lackey, the prosecutor, Bob Norman, said, “Of course, at that time, you didn’t know that he picked up the phone and called the U.S. Attorney’s Office as soon as you walked out.”

  “No, sir,” Balducci said.

  In fact, it took Judge Lackey two weeks to decide to call the U.S. Attorney’s Office.

  Balducci’s belief that he would be welcomed into the Scruggs Katrina Group was, at best, a pipe dream. The partners would never have accepted him.

  Balducci also testified that Backstrom emailed him a proposed order for the judge on May 4. After receiving it, he said, “then I generated an original document on my own computer system so that I would have the original order.”

  No copy of the purported order, which had been sought during the raid on Scruggs’s firm, had ever been found. Members of Scruggs’s firm insisted that it had never existed.

  More important, Balducci testified that after he had been wired by federal authorities on November 1, he told Backstrom and Zach Scruggs about a new $10,000 demand by Judge Lackey.

  “How did Zach Scruggs and Sid Backstrom react?’ Balducci was asked by the prosecutor.

  “It was not a problem,” he said.

  In the actual conversation, recorded by federal authorities, Balducci made no specific mention to either Zach Scruggs or Backstrom of the $10,000.

  While Balducci was testifying, Zach tried to call him at his New Albany office. A secretary said Balducci was in Oxford, but she did not know where to reach him. A runner from the Scruggs firm was sent to the meager Patterson-Balducci office across the square, but no one was there.